Aussie drifting ahead RBA minutes

The Australian dollar has edged lower on Monday. AUD/USD is currently trading at 0.7413, down 0.12% on the day. The Australian dollar climbed 1.57% last week, its best week since early September.

Risk sentiment appears to be alive and well in the currency markets, as the Australian, New Zealand and Canadian dollars all registered strong gains against their US counterpart. The Aussie flexed some muscles despite some weak domestic data last week. Consumer sentiment fell by 1.5% in October, and the employment report showed a triple-digit job loss for the second straight month. The week ended with a strong Retail Sales report out of the US, with a gain of 0.7%. This points to a rebound in consumer spending after a soft Q3, and has raised hopes that the US economy is recovering after the recent slowdown due to the Delta variant.

The RBA will be in the spotlight on Tuesday, with the release of the minutes from the October policy meeting. The rate statement from that meeting was essentially a repeat of the September statement and had little effect on the Australian dollar. RBA Governor Philip Lowe has been transparent and candid in his public remarks, and in the October rate statement he said that the Delta outbreak had hurt the recovery and that GDP was expected to have “declined materially” in the third quarter. If the minutes reiterate these comments, sentiment towards the Australian dollar could weaken. Lowe noted that inflation remains slightly below the RBA’s target of 2.0%, which means that unlike the case with the Federal Reserve and the BoE, the RBA is not under pressure to raise rates in order to curb red-hot inflation.

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AUD/USD Technical

• There is resistance at 0.7476. Above, we find resistance at 0.7532
• The pair has support at 0.7328.  Below, there is support at 0.7236

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